RBI plans 3% CRR for banks

Kolkata: Reserve Bank of India (RBI) deputy governor Dr Y V Reddy has said Indias central bank is planning to move to a 3-per cent cash reserve ratio (CRR) regime. The RBI is considering restricting the banks access to the call market to 2 per cent of aggregate deposits or 25 to 50 per cent of the banks net-owned funds as part of the objective to impart greater efficacy to the monetary policy.

At the current stage, Reddy said, the cut in CRR towards the desired target could be considered only if it is a package. "While one of them relates to the present way of maintenance of cash balance by banks with the RBI, the other is restriction on using call-money options." Time has come to take a hard look at the access of the banks to call-money, he said. "The call-money window should be used to iron out temporary mismatches in liquidity and not as a source of funding normal requirements on a sustained basis."